Harvey's blogspot - gold and silver data and related news items of the day.....

http://harveyorgan.blogspot.com/2012/08/greek-unemployment-rises-to-231youth.html

THURSDAY, AUGUST 9, 2012

Greek unemployment rises to 23.1%/Youth unemployment in Greece an astonishing 55%/China has soaring food prices as their CPI skyrockets/

Good evening Ladies and Gentlemen:

Gold closed up $4.20 to $1617.10 whereas silver rose by two cents to $28.09. The day started as a risk off situation with the monthly ECB report from Draghi in which he stated again his willingness to purchase sovereign bonds outright.  We heard from Greece that their unemployment rose to a high of 23.1 % and even more troubling is it's youth unemployment is 55%.  Pretty soon this figure will soon hit 100%.
The trade deficit in England rose to 10.1 billion pounds catching most totally off guard. Finally China continued to disappoint as they reported a huge increase in their CPI as food prices are ravaging this nation.
We will go over all of these stories but first...

Let now head over to the comex and assess trading today.  The total gold comex OI rose by 1,790 contracts from 388,254 to 390,044.  Gold had a good day yesterday so we probably lost a few bankers who covered some of their shorts.  The August delivery month saw its OI fall by 75 contracts from 2712 to 2637.  We had 76 delivery notices yesterday so in essence in gained 1 contract in additional gold ounces standing. The September gold month saw its OI rise by 34 contracts to 1460.  The next official delivery month is October.  Generally players bypass October and head straight to December.  The estimated volume at the gold comex is the weakest  that I can remember coming in at 70,362.  The confirmed volume yesterday came in at 92,651.  Many investors have vacated the gold comex playing field for other venues.  This is a major concern to our CME boys.The total silver comex OI plays to a different piper.  The OI remains elevated as it's total rose by another 293 contracts to 124,569 from 124,276.  The August delivery month saw its OI fall by 4 contracts from 5 to 1.  We had 4 delivery notices yesterday so everything is in balance and we neither gained nor lost any silver oz standing.  The next delivery month is September (also a slow delivery month) and here the OI fell by 2624 contracts from 52,289 to 49,665.  Almost of these players rolled into December.  It seems that we have some very determined silver players out there. The estimated volume was extremely weak at 30,947.  The confirmed volume yesterday was much better at 50,000.

****** 

Not much action in the gold vaults today.
We had the following customer deposit:

i) 2379.1  (Brinks)
ii) 4437.694 (Scotia)

total deposit:  6816.794oz

we had no dealer deposit and no withdrawals by anyone.

We had two adjustments and both were the customer leasing gold to the dealer:

i) 407.64 oz  out of the HSBC vaults
ii) 33,414.186 out of Scotia

Thus the total registered or dealer gold inventory rests tonight at 2.844 million oz or 88.46 tonnes of gold

The CME notified us that we had 283 notices filed today for 28300 oz.  The total number of notices filed for the month total 7358 for 735800 oz.  To obtain what is left to be served upon, I take the OI standing for August (2637) and subtract out today's notices (283) which leaves us with 2354 or 235400 oz left to be served upon our patient longs.

*******

We had very little activity inside the silver vaults today.

The customer received the following deposit:

1.  168,218.01 oz into Scotia.

We had no dealer activity and no customer withdrawal.
There was just one tiny adjustment whereby at Scotia a small amount of silver was leased from a customer back to a dealer  (4,844.10 oz)

The registered or dealer inventory rests tonight at 35.362 million oz
The total of all silver rests at 137.585 oz

The CME notified us that we had zero notices filed and thus the total number of notices remain at 150 for
750,000 oz.  To obtain what is left to be filed upon, I take the OI standing for August (1) and subtract out today's notices (0) which leaves us with 1 notice to be filed upon.

and non redundant news items of the day....

Whether it's up or down, central banks are manipulating markets in secret

Submitted by cpowell on Thu, 2012-08-09 04:52. Section: Daily Dispatches

1:10a ET Thursday, August 9, 2012

Dear Friend of GATA and Gold:

Izabella Kaminska, the brilliant financial writer and researcher at FT Alphaville, has gone from suggesting, last September, that central banks were suppressing the price of gold by stuffing leased metal into the market --

http://ftalphaville.ft.com/blog/2011/09/14/677021/why-gold-forward-rate-...

-- to suggesting, this month and last, that central banks now may be supporting the gold price as a mechanism of currency devaluation or at least reflation:

http://ftalphaville.ft.com/blog/2012/08/07/1109781/gold-qe/

http://ftalphaville.ft.com/blog/2012/07/10/1077461/propping-up-the-gold-...

It's not such a wild idea. GATA people and other students of the gold market whose work GATA has brought to your attention, like the Scottish economist Peter Millar --

http://www.gata.org/node/4843

-- and geopolitical analyst James G. Rickards --

http://www.gata.org/node/8755

http://www.gata.org/node/9067

-- have speculated on the necessity of an upward revaluation of gold to avoid either a deflationary collapse of Western economies or a hyperinflationary collapse of Western currencies.

The financial newsletter writer Stewart Thompson has asserted the same thing for at least three years and recently has claimed that central banks have already gotten behind an upward move in the gold price --

http://www.gata.org/node/7090

http://www.gata.org/node/9005

http://www.gata.org/node/9955

-- though such a policy has been hard to find in the gold price chart over the last year and a half.

Central bank or government intervention to raise the gold price is as much a matter of history as central bank or government intervention to suppress the gold price is. Kaminska's most recent commentary, cited above, notes the U.S. government's confiscation of gold coin in 1933 at the official price of $20.67 per ounce and gold's revaluation six months later to $35 per ounce, a 69 percent devaluation of the dollar. The gold price was held at $35 per ounce for 35 years, the last eight of them through the frankly suppressive and market-defeating mechanism of the London Gold Pool:

http://en.wikipedia.org/wiki/London_Gold_Pool

Of course central banks don't confide their gold policies to anyone except the investment banks that happily implement those policies as masking agents, gaining the ability to profit through insider trading, and GATA has had to sue the Federal Reserve a couple of times to try to discern its gold policy --

http://www.gata.org/node/9917

http://www.goldensextant.com/

-- just as we recently brought freedom-of-information actions against not only the Fed but also the U.S. Treasury and State departments:

http://www.gata.org/node/11606

But there's a problem with Kaminska's musing that only central banks are propping up the gold price these days. Yes, some central banks, mostly Eastern ones, are buying gold, but there is no indication of gold buying by any major Western central bank. Indeed, to the contrary, there is a long history over the last couple of decades of Western central bank gold sales, leases, and swaps that can be interpreted only as mechanisms for underwriting the "paper gold" market -- that is, to use the euphemism for gold price suppression, for providing "liquidity" to the gold market. To support its price, Western central banks would not have to come close to buying gold. They could just stop supplying "liquidity" to the "paper gold" market.

Now maybe Western central banks are slowly withdrawing support from the "paper gold" market, but it sure didn't look that way when someone sold immense amounts of "paper gold" simultaneous with the devaluation of the Swiss franc last September, apparently meaning to prevent the metal from ascending to the role of ultimate "safe haven" currency.

That is, the decades of Western central bank gold price suppression, right up to the attack on gold amid the Swiss franc's devaluation last September, are almost certainly still exerting a far more suppressive effect on the gold price than any supposed recent support being lent to gold by Western central banks.

But regardless of whether Western central banks have turned to supporting the gold price to devalue currencies and reduce the burden of unpayable government and private-sector debt, those who believe that those central banks are suppressing the gold price and those who believe that central banks are supporting it should be able to agree that central banks are manipulating the gold market largely surreptitiously, which has been the essence of GATA's complaint since the organization's founding in 1999. It is simply taken for granted -- not just by most gold market analysts but even by the supposed journalists in the mainstream financial news media -- that central bank policy formulation and even central bank policy itself is not to be questioned directly.

How absurd and tragic that these supposed journalists, when compelled, usually resentfully, to report about gold, seek interviews with investment house analysts and newsletter writers but never, ever with the primary sources, central banks themselves. That the central banks wouldn't say anything -- that they have to be sued for such basic information -- is no excuse, for such unaccountability itself then becomes the story.

Of course it's not just journalism that is at fault; it is also entire political systems. Elected agencies of government may decide every trivial question but the valuation of all currency, capital, labor, goods, and services in the world is left to be determined in secret by a few dozen people, as if this is the natural order of things.

It is not. It is the destruction of democracy.

Powerful as central banks are, the basis of their power is only this refusal to question, to undertake the most ordinary journalism. The only thing that sustains them is the failure of journalism -- the failure of The Wall Street Journal, the Financial Times, The New York Times, the London Telegraph, the Associated Press, Reuters, Bloomberg News, and so forth -- to demand of them:

Exactly what are you doing in the markets, and why?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

*******

The following was totally missed in Bart Chilton's comments to Bloomberg.  He refers to anomalies in both GOLD and silver:

"I continue to believe, consistent with my previous statements and information from the public, that there have been devious efforts related to moving the price of silver" Chilton wrote to Bloomberg. "There have also been silver and gold market anomalies outside of the silver investigate window that have raised, and continue to raise, market concerns." 

*****

Ted Butler responds to the London Financial Times article. I am in agreement with him:

(courtesy Ted Butler)

THE CFTC SILVER INVESTIGATION

Theodore Butler

  | 

 August 9, 2012 - 9:30am

   

There has been an explosion of interest and commentary these past few days as a result of a front page story in Monday’s edition of the influential Financial Times (of London). The story stated that the CFTC was set to drop its four year investigation into alleged silver price manipulation due to insufficient evidence to bring charges, according to three unnamed sources. I went to sleep Sunday evening when the story first appeared prepared to wake up to similar and confirming stories in other publications. Instead, there were no other stories confirming the case was set to be dropped; only strong statements that the FT was story was “premature” and “inaccurate in many respects” by a named source, Commissioner Bart Chilton of the agency.

The CFTC’s silver investigation is a hot button issue and the FT story, as well as Commissioner Chilton’s response to it, set off an outpouring of emotion and conjecture in the precious metals world. And for good reason, as this is an extremely important issue. There can be no greater concern than whether a market is manipulated in price. The issue of a silver manipulation is also a divisive matter, even within the CFTC itself; otherwise there likely wouldn’t have been leaks that the investigation was over and the immediate response of not so fast. As is usually the case with extremely divisive issues (like politics and elections), emotions take hold and the real issues can get distorted.

Let me try to frame the picture in an unemotional manner. Admittedly, that’s no easy task since I was the prime initiator behind this silver investigation and the two prior CFTC silver investigations in 2004 and 2008. (Too bad there’s no Olympic event for initiating government investigations). However, the truth is that four years ago I was not trying to get the Commission to investigate, as they had just completed a few months earlier, in May 2008, their second silver investigation in four years. By then, I knew where the Commission stood on whether silver was manipulated and it was pointless to ask them to investigate again. I had a different motive in mind when I urged readers to write to the CFTC about the now-infamous Bank Participation Report of August 2008. That was the report that showed that one or two US banks held an obscenely large and concentrated short position in COMEX silver futures that amounted to 20% of world production and 30% of the entire COMEX silver market. No major market had ever been that concentrated. I knew that this short position was so concentrated that, in and of itself, it proved silver was manipulated because the price would be radically higher in its absence. That is always the litmus test for manipulation, namely, what would the price most likely be if a concentrated position did not exist?

As a result of the August 2008 Bank Participation Report and subsequent CFTC correspondence to US lawmakers, I also learned at that time that JPMorgan was the big silver short, as I speculated on in this article.http://www.investmentrarities.com/ted_butler_comentary/09-02-08.html This is when and where the precious metals world came to learn that the big silver short was JPMorgan.

I asked readers to write to the CFTC not to investigate silver anew, but for the agency to simply explain how a big bank holding such a large percentage of the market would not be manipulation. This is a question that the Commission should have answered immediately since it was so basic to commodity law. The last thing I intended was for the agency to embark on a multi-year phony investigation as a delaying tactic for not being able to answer a basic regulatory question. Because the Commission could not explain the legitimacy of JPMorgan’s concentrated short position, they continued to drag out resolution by pretending to investigate. But four years is an extraordinarily long time for any government investigation, phony or otherwise, and it appears that the CFTC has to confront the issue soon; hence the FT article.

While the FT article was disappointing (at least it mentioned my name in a non-derogatory manner) and Chilton’s response was encouraging, the reality is that it is unlikely that the investigation will be resolved much differently than the version leaked to the paper. For one thing, nobody likes admitting they had royally screwed up and if the Commission were to bring manipulation charges now in silver, it would be admitting that it missed the wrongdoing for the previous two decades, despite continuous and documented warnings from 1986. How likely is that?

More importantly, were the agency to charge JPMorgan with manipulation of the silver price (as it should) that could set off a series of events that could easily grow out of control. One thing that makes the silver manipulation so potentially profound is that the core allegation is of a crime in progress. The CFTC has never busted up a manipulation that was in force; like most government agencies, it only reacts after the fact. Don’t take that solely as a complaint, but more as an observation that governments are more reactive than proactive. Because the silver manipulation is very much in force, were it to be terminated by CFTC actions against JPMorgan and/or others, it would be a “live” event for the first time. History shows that all manipulations end violently. In the case of silver, since it has been depressed in price by a downward manipulation, its termination would necessarily cause prices to explode higher. Any charge brought by the CFTC would send a clear signal to the world that silver had been depressed in price and was undervalued and, therefore, should be purchased. This would cause a flood of buying and discourage new selling, causing the price to truly explode, most likely in disorderly market conditions. Do you find it likely that the CFTC would wish to cause that disorderly pricing that could lead to further unsettled conditions in other markets?

If JPMorgan (and perhaps the CME Group) were found to be the main culprits in the silver manipulation and the CFTC brought charges against them, the repercussions to JPM and the CME could be a threat to them as going concerns. It was never a case that JPMorgan couldn’t financially afford to buy back its concentrated silver short position; it was always a case that should JPM ever move to buy back aggressively to the upside that would prove conclusively that it had been manipulating the price of silver all along. That would set JPMorgan (and the CME) up for a legal holocaust, both civil and criminal. There has been talk of a civil litigation nightmare for those banks deemed guilty in the developing Libor manipulation; but determining damages will be difficult because the Libor rates were allegedly manipulated both up and down, making the damages unclear and hard to prove. Were there to be findings of a downward manipulation in silver, those damaged, from investors to producing companies and countries could easily demonstrate the damage. Back in the Hunt Bros silver manipulation of 1980, one of the successful litigants was Minpeco, the government producer organization from Peru, who I remember collected more than $100 million. That would be chicken feed compared to the consequences of the much longer downward silver manipulation of today by JPMorgan. And this says nothing of potential criminal liability.

JPMorgan is perhaps the most important and influential US bank and for the CFTC to move against them in a matter as important as basic market manipulation could lead to unintended consequences that could threaten the world’s financial system. Do you think the CFTC would dare challenge the supremacy of JPMorgan considering that potential financial fall-out? Besides, as I have written previously, JPMorgan is too big to sue, at least matched up against the CFTC. The matter of the bank manipulating any market is something that JPMorgan would defend against to the death, as for it to be found guilty could possibly end the bank in its current form. JPMorgan would certainly spend $5 billion (only one quarter’s net profits) to fight any charges in connection with a silver manipulation and, at a minimum, delay a legal resolution for decades. On the other hand, the CFTC is struggling to fund the whole agency on $200 to $300 million annually. This is most likely the reason behind the leak to the FT about the silver investigation being dropped, namely, the CFTC is no match for JPMorgan and the agency knows it. This has nothing to do with law, or justice, or doing what is right; it is simply a case that the crooks at JPMorgan (and the CME) can bully anyone they chose, including the US Government. The most plausible alternative explanation, of course, is that the Treasury Dept ordered the CFTC to keep its hands off JPMorgan. Either way, it stinks.

The truth is that the silver investigation was a ruse from the start in that the CFTC could never have moved against JPMorgan or the CME in any circumstance. The proof of that is evident in the many other specific instances of price manipulation in silver that have occurred after the soon to be dropped investigation began. The most obvious instances were the two separate 30% and 35% price smashes in a matter of days that occurred in silver in 2011. There never were such blatant price declines in such a short time in any world commodity in history, to say nothing about there being no obvious supply/demand changes to account for the declines.

In other words, the CFTC started their third silver investigation four years ago as a way of avoiding having to explain how JPMorgan could be allowed to hold a clearly manipulative concentrated short position and then ignored the two greatest manipulative price events in commodity market history while the phony silver investigation was under way. Think of how devious and dishonest the CFTC has been; it announces a formal silver investigation to avoid having to answer bedrock regulatory questions, then ignores the two most manipulative prices events in history claiming it can’t comment on them because there is an active investigation under way. If government officials could ever be horse-whipped for malfeasance and for failing to protect the public interest, surely the CFTC’s performance in silver would permit it.

I realize that what I have written to this point paints a picture that is not optimistic for the resolution of the silver investigation that most would favor. I am sorry about that, but I try to be an analyst and not an entertainer. That said I’d like to spend some time explaining why the outcome of a dropped case may not matter much and that the net result is good for silver. More than anything, this FT leak was likely a trial balloon for the CFTC to gauge public reaction to it dropping the case. If so, the reaction couldn’t be clearer; even I was taken aback by the near universal condemnation of the agency for proposing to drop the case. I think what got to people the most was the suggestion that the agency would walk away without bothering to explain the concentration and the two historic price drops of 2011, to say nothing of the almost daily beatings in silver as a result of crooked High Frequency Trading. If anything, the FT article may have given legs to the silver manipulation allegations.

While it was a mainstream media publication that leaked the story, the silver manipulation is surely not a mainstream media issue. The silver story is an Internet and private publication issue that grew despite being ignored in the mainstream media. As such, any declaration that the matter is now closed will not close it anywhere outside the MSM, where it was never accepted to begin with. It’s not just that the silver manipulation was never accepted by the MSM, it was more a case of it never being allowed to be openly discussed. But legitimate questions of undue market concentration and historic and unjustified silver price movements are matters worthy of transparent examination that MSM censorship has been unable to stifle.

Not only is the matter not going away, the leak to drop the case may bring greater attention to it. Such attention could prove to be the death knell for the silver manipulation, as the last thing the silver manipulators want or need is a fully transparent examination of the facts. One of my longest held beliefs has been that as time rolls on more would become aware of the real silver story and once they did, more investment demand in silver would result. That has occurred and any new attention brought to silver as a result of a dropped investigation will likely accelerate the process. The truly amazing thing is in how slowly the real silver story has spread in the ranks of super big investors. Aside from Eric Sprott, very large investors have overlooked the silver story completely. I am as certain as I can be that these very large investors just haven’t taken the time to look objectively at silver. I think it’s a case of silver being such a universally known item that most people assume they already know all the facts because they know what silver is. This includes very large investors who, in addition, may actually be turned off that so many smaller investors have invested in silver. It’s a common human failing to dismiss something because others thought to be less knowledgeable got there first. In the long run, however, very large investors are more concerned with superior returns, so the key is getting them to look at silver objectively. The dropping of the silver manipulation may be that key.

Perhaps the most amazing thing of all, at least to me, is the glaring fact that even after four years of non-stop public allegations about involvement in the silver manipulation, JPMorgan still remains the big short. It is hard for me to comprehend how such a large and powerful financial organization (as well as the CME) could silently tolerate the obvious reputational damage which is accruing. While JPMorgan’s short COMEX silver position is in the lower range of what it has been since the Bear Stearns takeover of March 2008, it remains shockingly large and concentrated. After last week’s big increase of 3000 contracts, JPM’s short position, at 18,000 contracts (90 million oz), is still more than three and a half times the proposed position limit in silver.

The most plausible explanation for why JPMorgan has not rid itself completely of this manipulative short position is because it can’t do so easily. This is particularly true if JPMorgan tried to buy back its silver short position on rising prices. It would be a shock to the silver market system if the biggest short seller of last resort suddenly turned buyer. In essence, this is the root problem with concentrated positions in general – they cannot be unwound without market upheaval. For JPMorgan to turn to the silver buy side would beg the question – who would sell to them and at what price? The problem with the sharply higher silver prices that JPMorgan would cause if it turned silver buyer is that it would confirm that the bank was, in fact, manipulating the price of silver all along. To my mind, this means JPMorgan is trapped. They can’t run and they can’t hide. This is precisely the conclusion that any large investor would reach if that investor took the time to study silver closely. I can’t see how that won’t happen in time and a more bullish set up is hard to imagine.

Of course, I would be the happiest guy in the world to be proven wrong about what the CFTC will do with the ongoing silver investigation. But the potential of the likely greater exposure of the real issues in silver that a dropped investigation would bring is plenty good. With silver, it’s always been about getting people to learn the real facts.

Ted Butler

August 8, 2012

*****

For those of you who are questioning demand for gold from Chinese citizens;

(courtesy Mineweb)

MUMBAI (MINEWEB) -

China may have overtaken India as the world's top consumer of gold in the first quarter of 2012, but the country is not resting on its laurels. By buying gold mines, and accumulating the produced gold before it hits the international market, China is able to purchase gold below the spot gold price.

In the first successful example of a Chinese company taking over a large-sized gold mine that is in production, Zijin Mining Group Co, China's top gold producer by output, said a subsidiary has bought more than 50% of Australia-listed Norton Gold Fields.

Jinyu International Mining, the fully owned subsidiary of Zijin Group, made a $190 million cash takeover offer in May for the Australian gold mine and then set about obtaining approval from Australian regulators.

In a statement, the company said the acquisition was in line with its international development strategies. Last month, news agencies in China announced that the company had received a notice from Australia's Foreign Investment Review Board that it had no objections to the purchase by Zijin or its subsidiaries of all issued shares of Norton Gold.

Zijing has also obtained approval for the deal from China's National Development and Reform Commission, which is one of the country's top regulatory bodies.

Zijin already holds 16.98% of Norton Gold Fields, which has mining rights covering an area of 693 square kilometers with total gold reserves of 185 tonnes. Last year, it produced 4.7 tonnes of gold.From its open cut and underground operations at Paddington, near Kalgoorlie in Western Australia, Norton reportedly produced 152,000 ounces of gold. Recently, it added two new mining operations, the Homestead underground mine and the Navajo Chief open cut, to supply ore to its processing facility.

Zijin, which is listed in Shanghai and Hong Kong, has a market capitalisation of over $12 billion and has interests across commodities including gold, copper, zinc, lead, tungsten and iron ore. The company is likely to refine 50 metric tonnes of gold in 2012.

In 2011, Zijin bought 60% of Kazakhstan-based miner Altynken, which has access to a gold mine in Kyrgyzstan.

Not all have been success stories though. Zijin shelved a proposed $545 million offer for Australia-based Indophil Resources, following delays in approval from the Chinese government.

On its part, Zijin has moved the country a step closer to cementing its position in the world market as a top consumer. Though China and India together make up about 54% of the world's gold purchases, the latter has long been number one. The dynamics are set to change this year.

While gold demand in China is set to jump by as much as 30%, to between 900 and 1,000 metric tons in 2012 from 769.8 metric tonnes last year, India's usage may fall to 700 to 800 metric tonnes, from 933.4 metric tonnes.

In the first three months, demand in China totalled a record 255.2 tonnes as compared to 232.5 tonnes a year ago. China actually replaced India as the world's top gold consumer at the end of 2011.
In the first 2 quarters of 2012, China's gold inflows from Hong Kong also increased six times. China's gold imports from Hong Kong were 65% higher in April than March, the third consecutive monthly rise according to Commerzbank.

Data also suggests China's new rich are turning to gold to protect their wealth amidst worries over property market curbs. Though China's inflation dipped to a 30-month low in July, as reported on August 9, inflation has slowed dramatically, freeing China's central bank to do more to stimulate the economy. Gold buying is clearly set to surge in the Asian country.


http://www.mineweb.com/mineweb/view/mineweb/en/page
31?oid=156756&sn=Detail&pid=31

****

Dimitri Speck: A high-frequency attack on gold

Submitted by cpowell on Thu, 2012-08-09 20:39. Section: Documentation

4:33p ET Thurday, August 9, 2012

Dear Friend of GATA and Gold:

Market analyst and GATA consultant Dimitri Speck today publishes at Safe Haven a study of what he concludes was a high-frequency trading attack on the gold futures market on June 7 that drove the price down $20 in two minutes. Speck concludes:

"Although in the past central banks repeatedly intervened in the gold market, it is unlikely that this action was done by a central bank. In the field of high-frequency trading, the technical complexity and the necessary level of experience and specialization are probably too high. Therefore, a private financial institution must have done the high-frequency price manipulation to achieve a trading profit. This was a well-defined incident in thin trading, limited to a short time period and to a single market. These conditions make it ideal for a successful investigation by the regulatory authorities."

Maybe the U.S. Commodity Futures Trading Commission will look into the incident when it finishes with its investigation of the silver market -- or when Hell freezes over.

Speck's analysis is headlined "A High-Frequency Attack on Gold" and it's posted at Safe Haven here:

http://www.safehaven.com/article/26474/a-high-frequency-attack-on-gold

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

and from Marshall Auerback

Marshall Auerback: Central Banks Will Need to Recover Their Gold

Although I have heard this line of reasoning before, it was interesting to see it coming from the economist Marshall Auerback.

There is not much doubt in my mind that the markets are being 'managed' here. By whom, for what reasons, and for how long is another question. But the trades and the tape are telling their tale.

I am wondering if this is a new phase of the Fed's interference in the markets in lieu of genuine economic reform. They have used indirect means to pump equities as a means of wealth transmission before. This was a favorite ploy of Robert Rubin when he was Treasury Secretary.

It would not surprise me if the gold price was being held around 1600 in order to give the banks an opportunity to redeem their leased gold IOU's to avoid embarrassment before things get 'messy' in Europe. The people in Germany, Italy, Spain, England, and Portugal will be angry enough, and to find out that their irresponsible banks had sold off their gold to their cronies in the bullion banks on the cheap might be a bit much. As for the US, that is a murky situation indeed.

I tend to view this as a long term trend. So whether it comes to light next week, next month, or next year is of less consequence than the continual leaking of information that confirms the great changes that are occurring.

If one is looking for quick hot money there are plenty of places and ways to chase that rainbow. And plenty of carnival barkers and tricksters to tell you how easy it is to do it.

Get Ready for the Gold Rebound Before It Is Too Late: Marshall Auerback
by Brian Sylvester of The Gold Report
August 8, 2012

The Gold Report: Marshall, in a July 12, 2012, post on the Pinetree website, you suggest that some central banks may have forward-sold their gold against their initial positions, thereby eliminating them altogether. Can you tell us more?

Marshall Auerback: I have seen these central banks in action and have met with people from several of them. They would contend it was their obligation to maximize the yield on any of the assets they had in their reserves, including gold.

Back when gold was in the low $300s/ounce (oz), the Bundesbank considered gold nuclear waste from the old gold-standard era. There are some suggestions, based on Roger Lowenstein's work, that the Bank of Italy lent out some of its gold to Long Term Capital Management as a funding source. The point is that these banks have been a major source of flows into the market. These flows have had the same impact as de facto sales, in that they make available gold to the forward market and help fill the gap between supply and demand.This is significant that the Bank for International Settlements has talked about reclassifying gold for commercial banks from a Tier 3 to a Tier 1 asset, which effectively means that gold will have 100% weighting, as opposed to 50%. This reflects a change in how the official sector views gold. 

The second phenomenon is what has been happening in the Eurozone. A fiat currency is vaporizing before our eyes. A number of central banks hold a substantial amount of euros in their foreign exchange reserves that may be worth nothing. Some central banks may have gold holdings, but not as much as they claim, because of forward sales. There is most likely a structural short in the market from the central banks.

A decade ago, the mining companies would have been selling forward production, and the private sector would have had the structural short position. Today, nobody is selling forward gold because companies are much more optimistic about the price, and nobody wants to borrow it right now. As usual, the central banks are on the wrong side of the trade.

TGR: Are you willing to speculate about which central banks are shorting gold?

MA: From what I have heard, it would not surprise me if the International Monetary Fund and the Bank of Italy have done it. The Bank of Spain and the Bank of Portugal have sold a lot of their gold and may be lending the rest; also the Bundesbank.

A lot of these sales took place many years ago when the price of gold was $500–1,000/oz. My point is that the actual holdings these banks retain are much smaller than what appears on their balance sheets. Of course, they would want to get that gold back to spare the embarrassment if the euro blows up. This is why I have suggested that even if there is one more selloff in gold, the declines will be cushioned because the central banks will be bidding to buy back what they sold forward.

TGR: Could this information create a spike in the gold price?

MA: Many thoughtful people would see the demise of the euro as very bullish for gold, along with the possibility of higher inflation in China and all of the qualitative easing introduced by the Federal Reserve lately. Yet, gold has gone nowhere.

If one measures the position of traders reports on the Comex and then factor in that the Over the Counter market (OTC) is about 5–10 times the size, the net long position of speculative interest in gold is huge. That said, net positions have been reduced substantially in the past several months—several hundred tonnes would be my guess—and yet the price hasn't declined that much, which suggests that there is a bid in the market. The official sector, perhaps?

I would say there could be another 400–500 tons liquidated, which would easily be absorbed by the central banks. Ultimately, this slow, ticking time bomb will resolve itself with a much higher gold price.

Source: Auerback at The Gold Report